As a real estate investor, you want to lease your properties in a way that is stable and safe for you. You want to maximize the return on your investment, and you’d like to remove as many obligations from yourself as possible.
When designing the leases that you use with your commercial clients, you want to consider the net. The three main types of leases are a single net lease, a double net lease and a triple net lease. What do these mean for your situation?
Who covers which costs
Essentially, all of these leases just determine who has to pay for specific costs related to the building. Your base commercial renters agreement is simply going to say that the individual has to pay a set amount for rent every month, and they have no other obligations beyond that. But you can also expand things in the following ways:
- Single Net Lease: A single net lease simply means that the tenant has to pay the property taxes and the base rent. The owner still has to cover things like insurance and maintenance.
- Double Net Lease: A double net lease adds both property taxes and property insurance to the monthly payments. The client is responsible for this so that you, as the property owner, are not.
- Triple Net Lease: A triple net lease moves the most responsibility to the tenant. In addition to those costs noted above, they also have to pay real estate taxes, property insurance, and the cost of utilities and maintenance on the property.
Different situations call for different types of leases. What’s important is to understand all of the options that you have and what steps to take to use the ones that will be best in your specific situation.